Venture capital trusts believe that new rules planned by the Financial Services Authority could cost them three-quarters of their investor base, with one wealth manager warning the developments are “very concerning” for small business investment.

A survey among UK venture capital trusts, which invest capital from high-net-worth individuals in small cap UK businesses, has revealed mounting concerns over moves by the FSA to limit the promotion of unregulated collective investment schemes – or UCISs – to only the most sophisticated of high-net- worth individuals.

Despite the fact that they are regulated entities, VCTs believe they will be included under the UCISs proposals, placing increasing strain on their investor base.

UCISs are unregulated pools of investment money which receive contributions from high net worth investors and are not authorised by the FSA, whereas VCTs are safeguarded, listed investment trusts, with recognised boards and investor updates.

VCTs have attracted over £1bn of investor money over the last three years, according to wealth manager Bestinvest, which compiled the survey.

All of the firms polled said they were “highly concerned” by the FSA proposals, projecting that fundraising could fall by as much as 75% as a result of the plans. Participants in the survey included Baronsmead, the VCT managed by Isis Equity Partners, and Albion Ventures.

Dan Tubb, head of VCTs at Bestinvest, said the regulatory clampdown could result in £200m each year failing to reach small businesses, and warned that the FSA plans were “very concerning” for small and medium enterprises in the current financial climate.

The FSA has said it will move to limit the marketing of UCISs and “close substitutes” and has yet to specifically exempt VCTs from the proposals. An FSA spokeswoman said firms that could be affected by the proposals have three months to respond.